MN Farmers Union: Price of Food is Going Up Due to Rail Transport of Oil

Created: 05/24/2014 7:05 AM

(KSTP) - Farmers across the state, especially in western Minnesota, say they've got a big problem that's about to become your problem: there aren't enough rail cars available to ship crops where they need to go, even though there used to be.

They say what changed is oil. The U.S. produces a lot more of it in than it used to. Most of it is transported by pipelines, but not all of it. According to the Association of American Railroads, the U.S. rail system transported more than 400,000 carloads of crude oil in 2013, up from 9,500 carloads in 2008. That's more than a 4,000 percent increase.

So here's what farmers say is happening: they say rail cars that used to transport crops are now being used to transport oil. That means farmers have to find other, typically more expensive ways to either store or ship their crops. In the end, they pass the extra costs onto their customers.

"The price of food is going to go up because rail is shipping oil instead of grain," said Minnesota Farmers Union President Doug Peterson. He thinks there needs to be an investigation that looks into why, in his opinion, there are rail cars for oil but not for crops.

Here's the problem with that though: the Surface Transportation Board is the agency that congress puts in charge of resolving railroad rate and service disputes. Peterson called the board a bureaucracy and said, "it's almost too big to fail and to correct here."

We reached out to the Surface Transportation Board, but they wouldn't respond to our questions, saying they can't because of a pending case. A public hearing was part of that case, however, and it happened in D.C. last month.

"We are very aware that BNSF service has not met our customers expectations or our own high standards," Stevan Bobb, the the executive vice president and chief marketing officer of BNSF Railway Company, said at the time. He also said crude oil is not receiving preferential treatment and that this winter's brutal weather affected an already-strained rail system.

Keith Creel, who's president of Canadian Pacific Railway, made similar remarks.

"Some of the rhetoric that's out there, the stuff about crude," he said, "crude is important, I value my crude shippers, but if you know the facts of the business and the economics, I make more money hauling grain then I do hauling crude. So it's not a fact that we don't care about grain."

Both railroad representatives said they're addressing the problem by adding resources to accommodate growth. They also said they're willing to work to become more transparent.

In the meantime though, back here in Minnesota, Peterson still sees big problems down the road, or maybe more aptly, down the track.

"There is a public need and a public good that is accomplished through efficient rail service and right now, in my opinion, it's not happening," he said.

Photo: MGN Online